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Health Reform Facing Early Legal Tests

Oct 07, 2010

This story was produced in collaboration with

Matt Sissel of Iowa City, Iowa, proudly served in Iraq as a combat medic. But he says he objects to being "conscripted" into an overhauled federal health care system.

The uninsured artist is riled about a provision in the new health law that would require him to purchase insurance or pay a penalty starting in 2014. Last July, he filed a lawsuit to have the landmark act declared unconstitutional. "I don’t want the federal government dictating my personal financial decisions," says Sissel, 29. "It can’t even run its own budget."

In attacking the law in the courts, Sissel has plenty of company. A number of interest groups, state officials and ordinary citizens are seeking to have the health care law struck down in federal court. 

Today, a federal judge in Michigan ruled that the mandate that individuals buy insurance is constitutional. U.S. District Court Judge George Steeh turned down a request from the Thomas More Law Center to issue an injunction blocking the government from taking any further action implementing the law. The non-profit law firm, based in Ann Arbor, often brings anti-abortion cases.  Steeh was appointed by President Bill Clinton. Legal action is heating up elsewhere as well:

-- This week or next, a federal judge in Pensacola, Fla., is expected to issue a preliminary ruling on perhaps the most prominent lawsuit. Brought by the governors or attorneys general of 20 states, the lawsuit seeks to have the act declared unconstitutional.

-- -- On Oct. 18, the Republican attorney general of Virginia — who has compared the Obama administration’s regard for states’ rights to the tyranny of King George — heads back to court for another round of hearings with a federal judge who recently turned down a Justice Department request to throw the case out.

The burst of litigation has the framers of the law and the Obama administration playing defense. Many scholars, such as Charles Fried of Harvard Law School, argue that the law is on firm legal footing. But there is no quick resolution in sight, and it may take a year or two, and a trip to the U.S. Supreme Court, for all the lawsuits to get sorted out.

Still, that might be a quicker route to upending the law, or parts of it, than a threatened GOP repeal effort in Congress. Even if Republicans pick up more seats in November, they’ll have a tough time getting major changes past President Obama.

Under the health care law enacted in March, more than 32 million additional Americans are expected to get insurance, either through an extension of Medicaid, the state-federal program for the poor, or through exchanges where low- and moderate-income individuals and families will be able to purchase private insurance with federal subsidies.

The law’s ambitious sweep has made it a target for those who see it as an unjustified expansion of government. Plaintiffs challenging the law include a variety of religious groups, the nation’s largest small-business trade association, and a who’s who of conservative legal activism.

Sissel, for example, is represented by the Pacific Legal Foundation, a Sacramento-based legal watchdog group that supports limited government, property rights, and free enterprise.

Liberty University, the fundamentalist Lynchburg, Va., college founded by the late Jerry Falwell, has filed a lawsuit claiming that exemptions from the law for religious groups are too narrow and violate freedom of religion under the First Amendment. The Tucson-based Association of American Physicians and Surgeons, which opposes government intervention in health care, also has sued.

Several Cases, Similar Views

In many cases, the lawsuits make similar arguments. Several contend, for example, that a provision of the law requiring most people without health insurance to get coverage or pay a penalty exceeds the power of Congress to regulate interstate commerce under the Constitution.

The states, in the Florida lawsuit, also are challenging a provision of the law that greatly expands Medicaid. They claim the changes will cost them billions of dollars and wreck their budgets for years to come.

Justice Department lawyers say the lawsuits are without merit and premature. The penalties for people without insurance won’t take effect until 2014, and the states won’t have to start picking up any of the costs of the expanded Medicaid until 2017.

But the critics say the changes are so profound, that the courts should act now. The law will "transform our nation beyond recognition" and "arm Congress with unbridled top-down control over virtually every aspect of persons’ lives," the states have argued in court documents in the Florida case.

Florida Attorney General Bill McCollum said in an interview that if the individual insurance requirement is upheld, there is no end to what the federal government might require people to do. "The government could ... force us to buy a General Motors car or put our money in a government-owned bank," he says.

Justice Department lawyers respond that the law was well within the power of Congress to enact. In court papers in the Florida case, they have described the law as "an important but incremental" extension of federal regulation of the health-care market.

Supporters of the law say healthy people must be required to buy coverage to offset higher costs that insurance companies face under the new law — otherwise, insurance will be too expensive for everyone.

In addition, they argue that dismantling the statute would hurt the poor, and would be a first step in rolling back laws dating to the New Deal that have given the government broad authority to regulate the behavior of individuals and states.

"These lawsuits have been mounted by people whose objective is to change constitutional law," says Simon Lazarus, public policy counsel for the National Senior Citizens Law Center, a non-profit legal and educational firm that advocates for low-income older adults. To hold that the health reform law is unconstitutional would require "massively consequential changes in the Constitution as it has been plainly understood."

Disagreement, Even Within State Governments

In some states, Republican and Democratic officials are slugging it out over their differing stands on the lawsuits.

In Washington state, for example, the state Supreme Court next month will hear a case that seeks to force the state’s Republican attorney general, Rob McKenna, to withdraw from the multistate lawsuit in Florida.

The hearing was set after the Democratic city attorney for Seattle, Pete Holmes, complained that state law prohibits McKenna from representing Washington in court without the support of the governor. Washington’s Democratic governor, Chris Gregoire, opposes the lawsuit. McKenna, considered a frontrunner for the governor’s race in 2012, says the law is on his side.

In Iowa, Republican Brenna Findley, is looking to unseat Democrat Tom Miller as attorney general, in part by vowing to join the Florida lawsuit if elected. This week,. Findley is hosting Virginia Attorney General Ken Cuccinelli at several campaign events. "Ken has led the way in fighting the federal takeover of America’s health care system," Findley says in a message to supporters on her campaign’s Facebook page. "Don’t miss this opportunity to speak to Brenna and Ken about this important issue!!"

Miller, a seven-term incumbent, says the case is weak, and that joining the lawsuit would be a waste of resources. "Above all else, an attorney general has to follow the law and do things that are consistent with the law," he says in an interview. "You don’t go ahead and file a lawsuit because you disagree with the policy."

Even conservatives acknowledge that Congress has broad powers under the Constitution. But they say the authority kicks in only when there is already some ongoing activity to regulate.

"The Supreme Court has never said Congress has the power to make you engage in economic activity," such as buying insurance, says Randy Barnett, a professor of constitutional law at Georgetown University Law Center in Washington.

States can require citizens to buy auto insurance or fire insurance for their homes — but that is because they have broad police powers under the Constitution that Congress does not have, he says.

Sissel figures the auto insurance he is required to maintain under Iowa law will cover his medical bills if he gets in an accident. He’s prepared to cover other bills out of his own pocket.

Healthy and trying to start an art business, he thinks his decision is rational. "There are all sorts of tragedies that can befall us in life. We can’t spend all of our time worrying about the statistically improbable," he says.

Defenders of the individual-insurance mandate say people who don’t carry insurance impose a cost on society. If people get sick and don’t have insurance, they say, the public will have to pick up the tab.

"People not buying health insurance ... they have not removed themselves from the marketplace. They have inserted themselves in the marketplace in perhaps the most aggressive way," says Steven Schwinn, a law professor at John Marshall Law School in Chicago.

Medicaid Costs At Issue

Another point of contention involves the Medicaid expansion. Many states already spend a quarter or more of their budgets on Medicaid, and some fear the cost will rise dramatically as the new law takes hold.

David Rivkin, a Washington lawyer representing the states in the Florida case, says there comes a point where the cost crosses a line. By turning the states into "financial wards of the federal government," he says, "you can vitiate state sovereignty."

But several studies have predicted the overall cost to the states will be relatively small compared with the huge influx of federal dollars and the benefits residents will get from having insurance for the first time.

The states also do not have to accept the money, and can withdraw from Medicaid, although Rivkin and others say that is not a realistic option, given how the public has come to depend on the program.

"Does that mean the more money the feds give (the states) the less control it has over how those dollars are spent?" says Brad Joondeph, a professor at Santa Clara University law school.

The argument "seems backwards," he says. "You end up with a perverse rule."

In Florida, Judge Roger Vinson has said that he’s leaning towards dismissing several counts in the states’ lawsuit, but that he would allow "at least one count" to proceed.

Vinson has already scheduled a follow-up hearing for December, when he’ll give what’s left of the case a closer look. He’s expected to issue a final ruling early next year, touching off a round of appeals.

The states want to move the case along as quickly as possible, to capitalize on what they view as public disenchantment with the law. They hope that public concern will shade how the lawsuit is viewed by the courts. They also believe that they can get the case before the U.S. Supreme Court before major features, such as the individual mandate, become effective in 2014. They believe that helps their cause because there will be less of the law to undo.

Barnett concedes that the Supreme Court usually bends over backwards to uphold laws of Congress. But if the law turns out to be highly unpopular, he thinks the high court will be open to "valid constitutional objections."

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